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2. Intermediate Course

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  1. 1. Ethereum 2.0 - What is it? 
  2. 2. What is cryptocurrency burning?
  3. 3. How to create your own cryptocurrency? 
  4. 4. Blockchain Oracle - what are oracles? 
  5. 5. How to make money with NFT?
  6. 6. What is an ERC20 token and how is it created?
  7. 7. The Metaverse – a new virtual world
  8. 8. Metaverse – TOP 15 virtual reality projects
  9. 9. Technical analysis – is it worth using?
  10. 10. What are DeFi liquidity pools?
  11. 11. Second layer (layer 2) - what is it? 
  12. 12. What are wrapped tokens 
  13. 13. What is the Lightning Network, and how does it work?
  14. 14. What are security tokens?
  15. 15. What is play-to-earn (P2E) and how does it work?
  16. 16. What are Social Tokens? 
  17. 17. Examples of the use of WEB3 on the blockchain
  18. 18. What is Web5? 
  19. 19. Ethereum London Hard Fork - what is it ? 
  20. 20. Segregated Witness - what is Segwit Bitcoin all about?
  21. 21. Polkadot - Decentralized blockchain and DOT cryptocurrency
  22. 22. Polkadot Parachain - Next-generation blockchain
  23. 23. Set up of Stop Loss and Take Profit orders
  24. 24. Trading order types: stop loss, trailing stop loss, LIMIT
  25. 25. What are Decentralized Cryptocurrency DEX Exchanges?
  26. 26. What is Curve Finance?
  27. 27. What is GameFi and how does it work?
  28. 28. Non-fungible tokens and NFT exchanges
  29. 29. Cryptocurrency steps - What is move to earn M2E?
  30. 30. What is Proof of Reserves (PoR)? How does it work?
  31. 31. Interoperability in the world of cryptocurrencies and blockchain
  32. 32. Blockchain and its layers - What is layer three in Blockchain (L3)?
  33. 33. What is Layer 0 in Blockchain technology?
  34. 34. What is layer 1 in Blockchain?
  35. 35. What is MakerDAO and DAI Stablecoin?
  36. 38. What is the SubDAO protocol, and how does it work?
  37. 39. The main differences between static NFT and dynamic NFT
  38. 40. Liquidity Provider Tokens (LPs). What are they, and why are they so important?
  39. 41. What is KnowOrigin NFT, and how does it work?
  40. 42. What is decentralized social media?
  41. 43. What is the Ethereum Name Service (ENS) and how does it work?
  42. 44. Arbitrum: Ethereum scaling solution - everything you need to know
  43. 45. Ethereum ERC-4337 - what is it and how does this standard work?
  44. 46. Sustainable Blockchain - Proof of Useful Work & Flux
  45. 47. Ethereum Proof-of-Stake (PoS) - what should you know?
  46. 48. Atomic Swap: What is an atomic swap, and how does it work with cryptocurrencies?
  47. 49. What Is Cryptocurrency Vesting? What Are Its Advantages?
  48. 50. What Is the Metaplex Candy Machine Protocol? How Does It Work?
  49. 51. What Is the BNB Greenfield Ecosystem?
  50. 52. Real Yield in DeFi - what is this trend? What does it consist of?
  51. 53. Polygon 2.0 - the value layer for the Internet
  52. 54. What Is Slashing in Cryptocurrencies?
  53. 55. How to Create Your Own Decentralized Autonomous Organization (DAO)?
  54. 56. The ERC-721X VS ERC-721 Standard – Key Differences!
  55. 57. Royalties – What Are They? How Does This Type of Licensing Fee Work?
  56. 58. Polygon 2.0 - the value layer for the Internet
  57. 59. ERC-6551 - the new NFT standard. What does it bring to the non-exchangeable token sector?
  58. 60. What is TradFi? The importance for cryptocurrencies!
  59. 61. What is the Real World Asset (RWA) trend in cryptocurrencies? Explanation and examples!
  60. 62. Pyth Network: a powerful oracle harnessing the power of Solana!
  61. 63. NFT Gas Fee - what is it? How can you reduce your gas fee?
  62. 64. MINA Protocol: the lightest blockchain in the world!
  63. 65. Market Cap versus Fully Diluted Market Cap - the most important differences you should know!
Lesson 20 of 63
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20. Segregated Witness – what is Segwit Bitcoin all about?

SegWit for short. What it is. It’s the biggest, non-mandatory update to the Bitcoin protocol. It involves separating the transaction signature proof from the transaction block and putting it into a separate layer. The update lowers transaction fees on the network and increases its scalability, but it doesn’t stop there. SegWit has brought many more benefits to Bitcoin, which we will talk about in this lesson. 

The activation of SegWit took place on 24 August 2017. It was carried out as a soft  fork, as there was no need to split the chain (hard fork) in its case. Only more computing power was needed for its acceptance. As we have already mentioned – it is optional, which means that supporters of classic solutions can still use the Legacy protocol. 

Creator 

SegWit was developed by Blockstream for the side chain Blockstream Elements. It was Luke-Jr – the lead developer of Bitcoin Core, who discovered how SegWit could be implemented into Bitcoin’s core protocol. From that point, the entire BitcoinCore team began working on the update. The coding was handled by Eric Lombrozo,  Johson Lau and Pieter Wuille, who also developed the Bitcoin Improvement Proposal  (BIP) – the document initiating the changes. 

SegWit – operation 

When making BTC transactions from a SegWit address, the transaction fee is much lower than from a Legacy address. This action is only possible in wallets that have been integrated with the update. Then such a wallet generates two additional SegWit addresses. One is a P2SH type and starts with 3. The other is “bech32” starting with  “bcl” and is always a SegWit address. Transactions from this address are always the cheapest. It is interesting to point out that addresses starting with “l” are always  Legacy addresses. Examples of wallets integrated with SegWit include Bitcoin Core,  Electrum, Green, Ledger, Trezor or even Exodus

SegWit vs Legacy 

A traditional BTC chain has input and output addresses and cryptographic signatures. All these elements, during a transaction, are placed in a single block of no more than 1 megabyte. Consistently, a new block is extracted by miners every 10  minutes. This form of Bitcoin’s blockchain protocol is called Legacy. 

SegWit organizes the data in a block. The block is the same size as Legacy.  However, it only allocates this capacity for transaction inputs and outputs.  Cryptographic signatures in this version have been moved outside the block and are not included in the transaction block capacity. They are included in the input and output transactions as a 3-megabyte extension to the block called “Witness data“.  Despite this separation, the update retains the digital signatures and is fully secure. 

SegWit adoption

Not all cryptocurrency exchanges have adopted the update. A report done by  Glassnode shows that only 6 exchanges have fully adopted SegWit. 

The benefits of the SegWit update 

Thanks to Segregated Witness Bitcoin: 

1. Got rid of transaction malleability, which allowed modification of an already cryptographically signed transaction. Admittedly, this feature was not a threat to the invalidity of the BTC exchange. Nevertheless, it provided the possibility to change the transaction ID, which was a bit of a trust barrier for some. 

2. Improved implementation of layer two protocols. It was due to SegWit that the introduction of, for example, Lighting Network and other Bitcoin protocol layers was possible. 

3. Increasing the block size from 1 megabyte to 4. This is four times the size. 

4. Wallet users with this update pay smaller fees for sent transactions, and the transaction approval time itself has been significantly reduced. 

5. Allows further improvements to Bitcoin to be implemented by modifying the  scripting language e.g. Schnorr Signatures. 

Summary 

We often hear that the community did not believe SegWit could solve scalability issues. It has proven otherwise. Moreover, much controversy has grown around the implementation itself. Technically, doing a hard fork would inspire more confidence and enthusiasm, but it would also have its drawbacks, which developers said would be much more difficult to overcome. 

There have also been many conspiracy theories surrounding SegWit. The update was rumoured to allow miners to steal funds. Well, so far no miner has succeeded.  SegWit adoption is growing, but still not everyone is taking advantage of it. Many companies or users still need time to implement it, even though it has been 4 years since its release. Moreover, there are still wallets and apps in the crypto environment that are not able to integrate with the app. SegWit is also something of a protest.  There are users who would like another scaling solution, which means they will never choose to adopt SegWit.

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